|3 Months Ended|
Mar. 31, 2014
BEAM LLC ACQUISITION
On February 26, 2013, the Company, entered into an equity exchange agreement (the “Exchange Agreement”) by and among the Company, Beam Acquisition LLC, a Nevada limited liability company and wholly-owned subsidiary of the Company (“Beam Acquisition”), Beam Charging LLC, a New York limited liability company (“Beam”), and Manhattan Charging LLC, a New York limited liability company (“Manhattan Charging”), Eric L’Esperance (“L’Esperance”), and Andrew Shapiro (“Shapiro” and together with Manhattan Charging, L’Esperance and the individual members of Manhattan Charging LLC, the “Beam Members”). The Company had previously entered into an agreement, dated December 31, 2012, (the “Initial Agreement”) with Beam Acquisition and Manhattan Charging, pursuant to which Beam Acquisition acquired all of the outstanding membership interests in Beam in exchange for 1,265,822 restricted shares (the “Exchange Shares”) of the Company’s common stock, par value $0.001 (the “Common Stock”) valued at $1,645,569, based on the market price of the Company’s common stock on the date of issuance, subject to certain conditions to be met. In the Exchange Agreement and after the conditions had been met, the Company, through Beam Acquisition, further identified the specific terms under which it acquired all of the outstanding membership interests of Beam and Beam became a wholly owned subsidiary of Beam Acquisition (the “Equity Exchange”).
As part of the Equity Exchange, the Company issued an aggregate amount of $461,150 of promissory notes (the “Promissory Notes”) to Manhattan Charging and paid $38,850 in transaction costs. The Promissory Notes accrue interest at a rate of 6% per annum on the aggregate principal amount, and was paid on April 15, 2013 (the “Maturity Date”).
The Company acquired Beam in order to expand its presence in the New York City market and has accounted for the transaction as a business combination. The fair value of assets acquired exceed the liabilities assumed at the closing date resulting goodwill of $1,601,882 representing the future economic benefits to be derived from the acquisition as a result of the significant presence of electric charging stations in the New York City metropolitan area.
The Exchange Agreement provided for an anti-dilution benefit to former members of Beam whereby until such time as a former member sells or disposes of all of his Company common shares of stock, any Triggering Event, as defined by the Agreement, whereby the issue price of the Company stock is below $1.58 shall cause the Company to issue a warrant to each former member to purchase an additional number of Company common shares at the Triggering Event price so as to preserve such Beam Member’s pre-Triggering Event percentage ownership in the Company. From an historical perspective, the Company has raised capital through the issuance of stock and issued stock, options and warrants for services and compensation on a frequent basis since inception at various prices, differing vesting periods and differing expiration dates. The Company has recorded warrants payable and a provision for warrants payable for warrants that will be issued based on the Triggering Events occurring during the period of February 26, 2013 through March 31, 2014. As of March 31, 2014, the warrants had not yet been issued. The Company can not estimate how long the former members will hold their stock, what market conditions will be when stock is sold and or when stock, options or warrants will be issued and under what terms of issuance as of the date of the acquisition. It is for those reasons, that the Company cannot estimate the amount of additional consideration associated with the anti-dilution benefit. The Company will continue to record an increase to the warrants payable and the related expense based on the occurrence of Triggering Events. The Company estimates the warrants payable based on Black Scholes inputs and recorded the fair value of the warrants to be issued as of March 31, 2014. The measurement is based on significant inputs that are not observable in the market, which “Fair Value Measurements and Disclosures” (ASU Topic 820) refers to as Level 3 inputs. The warrants payable balance at March 31, 2014 and December 31, 2013 was $722,600 and $1,216,000 respectively after a gain on a mark to market adjustment of $493,400 was recorded for the three months ended March 31, 2014.
350 Green Acquisition
The Company has accounted for the acquisition of 350 Green as a business combination. The fair value of the liabilities assumed exceeded the fair value of the assets acquired and the consideration transferred, by $3,299,379 which was ascribed to goodwill.
The unaudited pro forma revenues and net loss of Car Charging Group, Inc. and the acquirees for the three months ended March 31, 2013 as if the acquisitions occurred as of January 1, 2013, is as follows:
ASSETS AND LIABILITIES HELD FOR TRANSFER TO TRUST MORTGAGE
The Company has been continuously negotiating with the 350 Green creditors in an attempt to reduce 350 Green’s liabilities. On April 17, 2014, the Company’s Board of Directors executed a resolution to form a Trust Mortgage relating to 350 Green. A Trust Mortgage is a non-judicial vehicle for the reorganization and the debt restructuring or the sale or wind down of 350 Green and a liquidation of its assets under the control of a third party trustee. It is similar in intent to an Assignment for the Benefit of Creditors under applicable state law but unlike an Assignment or a liquidation under the United States Bankruptcy Code, the Trust Mortgage is not governed by statute except to the extent of Article 9 of the Uniform Commercial Code as it relates to the grant of a security interest by the Company to the Trustee.
The Trust Mortgage is a binding contract between 350 Green and the trustee, to serve as fiduciary for the benefit of all creditors of 350 Green, and 350 Green confers upon the trustee the authority and power to manage the operations and assets of the business in a manner that will maximize recovery for 350 Green’s creditors.
The following table summarizes the fair value of assets and liabilities that would have been transferred to the Trust Mortgage as of March 31, 2014 and December 31, 2013:
The major components of revenue and expense in the consolidated Statement of Operations pertaining to the net liabilities that would have been transferred to the Trust Mortgage for the three months ended March 31, 2014 were:
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
Reference 1: http://www.xbrl.org/2003/role/presentationRef